417775876 Financial Accounting Final Exam docx PDF

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FINAL EXAMINATIONFINANCIAL ACCOUNTING 1NAME: SCORE:PROFESSOR: DATE:INSTRUCTIONS: Write your final answer at the answer sheet provided at the end of exam. Strictly no erasure. Provide solutions as necessary. Good luck!CASH AND CASH EQUIVALENTS The following data pertain to Lincoln Corporation on Dece...

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FINAL EXAMINATION FINANCIAL ACCOUNTING 1 NAME: PROFESSOR:

SCORE: DATE:

INSTRUCTIONS: Write your final answer at the answer sheet provided at the end of exam. Strictly no erasure. Provide solutions as necessary. Good luck! CASH AND CASH EQUIVALENTS 1. The following data pertain to Lincoln Corporation on December 31, 2010: Current Current Payroll Foreign

account at Metrobank account at Allied Bank account bank account (in equivalent pesos)

Savings deposit in a closed bank Postage stamps Employee’s post dated check IOU from employees Credit memo from a vendor for a purchase return Traveler’s check Money order Petty cash fund (P4,000 in currency and expense receipts for P6,000) Pension fund DAIF check of customer Customer’s check dated 1/1/11 Time deposit – 30 days Money market placement (due 6/30/11) Treasury bills, due 3/31/11 (purchased 12/31/10) Treasury bills, due 1/31/11 (purchased 1/1/10)

P1,800,000 (100,000) 500,000 800,000 150,000 1,000 4,000 10,000 20,000 50,000 30,000 10,000 2,000,000 15,000 80,000 200,000 500,000 200,000 300,000

The cash and cash equivalents as of December 31, 2010 is a. b.

P2,784,000 P3,084,000

c. d.

P3,784,000 P3,584,000

2. Ralf Corporation had the following account balances at December 31, 2010: Cash on hand and in bank Cash restricted for bonds payable due on June 30, 2011 Time deposit Savings deposit set aside for dividends payable on June 30, 2011

P2,500,000

1,000,000 3,000,000

500,000

The total amount to be reported as cash and cash equivalents as of December 31, 2010 is a. P7,000,000 c. P6,500,000 b. P6,000,000 d. P5,500,000

3. On December 31, 2010, Alfonso Company had the following cash balances: Cash in bank

P15,000,000

Petty cash fund

50,000

Time deposit

5,000,000

Saving deposit

2,000,000

Cash in bank includes P500,000 of compensating balance against short term borrowing arrangement at December 31, 2010. The compensating balance is legally restricted as to withdrawal by Alfonso. A check of P300,000 dated January 15, 2011 in payment of accounts payable was recorded and mailed on December 31, 2010. In the current assets section of the December 31, 2010 statement of financial position, what amount should be reported as “cash and cash equivalents”? a. b.

P21,850,000 P16,850,000

c. d.

P21,800,000 P14,850,000

4. An office supplies enterprise, operating following data in its accounting records:

on

a

calendar-year

basis,

01/01 Cash

P 47,000

Inventory

101,000

Accounts receivable Accounts payable

the

12/31

P

93,000

82,000

116,000

68,000

Sales

has

63,000 1,150,000

Cost of goods sold

900,000

Operating expenses

200,000

What is the expected cash balance for December 31? a. P50,000 c. P 76,000 b. P66,000 d. P134,000 5. The petty cash fund of Guiguinto Company on December 31, 2010 is composed of the following: Coins and currencies

P14,000

Petty cash vouchers: Gasoline payments

3,000

Supplies

1,000

Cash advances to employees

2,000

Employee’s check returned by bank marked NSF 5,000 Check drawn by the company payable to the order of the petty cash custodian, representing her salary

20,000

A sheet of paper with names of employees together with contribution for a birthday gift of a co-employee in the amount of

8,000 P53,000

The petty cash ledger account has an imprest balance of P50,000. correct amount of petty cash on December 31, 2010? a. P34,000 c. P39,000 b. P14,000 d. P42,000

What is the

BANK RECONCILIATION 6. The following data pertaining to the cash transactions and bank account of Mandirigma Company for the month of May are available to you: Cash balance, per records, May 31 Cash balance, per bank statement, 5/31 Bank service charge for May Debit memo for the cost of printed checks delivered by the bank Outstanding checks, May 31 Deposit of May 30 not recorded by bank until June 1 Proceeds of a bank loan of May 30, net of interest of P300 Proceeds from a customer's promissory note, including interest of P100 Check No. 2772 issued to a supplier entered in the accounting records at P2,100 but deducted in the bank statement at an erroneous amount of Stolen check lacking an authorized signature, deducted from Mandirigma's account by the bank in error Customer's check returned by the bank marked NSF; no entry has been made in the accounting records to record the returned check

P17,194 31,948 109 125 6,728 4,880

5,700 8,100

1,200

800

760

What is the correct cash balance at May 31? a. P29,200 c. P30,000 b. P30,300 d. P30,900 7. The information below is from the books of the Seminole Corporation on June 30: Balance per bank statement Receipts recorded but not yet deposited in the bank Bank charges not recorded

P11,164 1,340

16

Note collected by bank and not recorded on books

1,120

Outstanding checks

1,100

NSF checks - not recorded on books nor redeposited

160

Assuming no errors were made, compute the cash balance per books on June 30 before any reconciliation adjustments. a. P11,404 c. P10,460 P12,348 d. P10,220 b. Shown below is the bank reconciliation for YOUR Company for May 2010:

Balance per bank, May 31, 2010

P75,000

Add: Deposits in transit

12,000

Total

87,000

Less: Outstanding checks Bank credit recorded in error

P14,000 5,000

Cash balance per books, 5/31/10

19,000 P68,000

The bank statement for June 2010 contains the following data:

Total deposits Total charges, including an NSF check of P4,000 and a service charge of P200

P55,000

48,000

All outstanding checks on May 31, 2010, including the bank credit, were cleared in the bank in June 2010.

There were outstanding checks of P15,000 and deposits in transit of P19,000 on June 30, 2010.

8. What is the cash balance per bank on June 30, 2010? a. P75,000 c. P82,000 b. P86,000 d. P86,200 9. What is the cash balance per books on June 30, 2010? a. P73,800 c. P88,200 b. P90,200 d. P94,400 10. As of June 30, 2010, the bank statement of Ang Po Trading had balance of P373,612. The following data were assembled in the reconciling the bank balance:  The bank erroneously credited Ang Po Trading for P2,150 on June 22.  During the month, the bank charged back NSF checks amounting to which P800 had been redeposited by the 25th of June.  Collection for June 30 totalling P10,330 was deposited the following  Checks outstanding as of June 30 were P30,205.

an ending course of

P2,340 of month.

Notes collected by the bank for Ang Po corresponding bank charges were P50. The adjusted bank balance on June 30, 2010 is a. P351,587 c. P353,927 b. P358,147 d. P359,687 

Trading

were

P8,150

and

the

ACCOUNTS RECEIVABLE 11. On December 31, 2010 the accounts receivable control account of Ipil-ipil Co. had a balance of P181,000. An analysis of the accounts receivable account showed the following: Accounts known to be worthless

P

Advance payments to creditors on purchase orders Advances to affiliated companies

2,500

10,000 25,000

Customers’ accounts reporting credit balance arising from sales return Interest receivable on bonds

(15,000) 10,000

Other trade accounts receivable – unassigned 50,000 Subscriptions receivable for ordinary share capital due in 30 days Trade accounts receivable – assigned

55,000 15,000

Trade installment receivable due 1 – 18 months, (including unearned finance charges, P2,000) 22,000 Trade receivables from officers, due currently 1,500 Trade accounts on which post-dated checks are held (no entries were made on receipts of checks) 5,000 Total

P181,000

The correct balance of trade accounts receivable of Ipil-ipil on December 31, 2010 is a. P 86,500 c. P 91,500 b. P103,500 d. P206,000 12. Roxy Company receivable:

had

the

following

Accounts receivable at 12/31/2009 Credit sales for 2010 Collections from customers for 2010, excluding recovery Accounts written off 9/30/2010

information

relating

P1,300,000 5,400,000 4,750,000 125,000

to

its

accounts

Collection of accounts written off in prior year (customer credit was not reestablished)

25,000

Estimated uncollectible receivables per aging of receivables at 12/31/2010 165,000

On December 31, 2010, the amortized cost of accounts receivable is a. P1,825,000 c. P1,635,000 b. P1,800,000 d. P1,660,000 13. Banayoyo Company sells to wholesalers on terms of 5/15, net 30. Banayoyo has no cash sale but 50% of customers take advantage of the discount. Banayoyo uses the gross method of recording sales. An analysis of trade receivables at December 31, 2010 revealed the following:

Age 0 – 15 days 16 – 30 days

Amount P15,000,000 3,000,000

Over 30 days

2,000,000

Collectible 100% 95% P1,500,000

On the December 31, 2010, what amount should be reported as discounts? c. P375,000 a. P750,000 b. P650,000 d. P500,000 14.

allowance for

The January 1, 2010 trial balance of Barlig Company shows: Accounts receivables Allowance for doubtful accounts

P2,000,000 100,000

Additional information for 2010: a. Cash sales of the company amount to P800,000 and represent 10% of gross sales. b. Ninety percent of the credit sales customers do not take advantage of the 5/10, n/30 terms. c. Customers who did not take advantage of the discount paid P5,940,000. d. It is expected that cash discounts of P10,000 will be taken on accounts receivable outstanding at December 31, 2010. e. Sales returns in 2010 amounted to P80,000. All returns were from charge sales. f. During 2010 accounts totaling P60,000 were written off as uncollectible. Recoveries during the year amounted to P10,000. This amount is not included in the foregoing collections. g. The allowance for doubtful accounts is adjusted so that it represent a certain percentage of the outstanding accounts receivable at year end. On December 31, 2010, the net realizable value of accounts receivable is a. P2,400,000 c. P2,270,000 b. P2,280,000 d. P2,260,000 15. The Pacifier Company uses the net price method of accounting for cash discounts. In one of its transactions on December 15, 2010, Pacifier sold merchandise with a list price of P500,000 to a client who was given a trade discount of 20% and 15%. Credit terms were 2/10, n/30. The goods were shipped FOB destination, freight collect. Total freight charges paid by the client amounted to P7,500. On December 20, 2010, the client returned damaged goods originally billed at P60,000.

What is the net realizable value of this receivable on December 31, 2010? a. P272,500 c. P280,000 b. P274,400 d. P333,200 16. December 31, 2010 balances of selected pertinent information are shown below:

accounts

Inventory, January 1

of

Bicolano

Company

and

P2,000,000

Purchases

7,500,000

Purchases returns and allowances

500,000

Sales returns and allowances

750,000

Inventory at December 31

2,800,000

Gross profit rate on net sales

20%

Gross sales for 2010 amount to a. b.

P7,750,000 P7,000,000

c. d.

P8,500,000 P9,125,000

17. Badoc Corporation's books disclosed the following information for the year ended December 31, 2010: Net credit sales

P1,500,000

Net cash sales

240,000

Accounts Receivable at beginning of year

200,000

Accounts Receivable at end of year

400,000

Badoc's accounts receivable turnover is a. 3.75 times c. 4.35 times b. 5.00 times d. 5.80 times 18.

Certain information relative to the operation of Cuyonin Company follows: Accounts receivable, January 1 Account

receivable collected

Cash sales

P

800,000 2,600,000 500,000

Inventory, January 1

1,200,000

Inventory, December 31

1,100,000

Purchases

2,000,000

Gross profit on sales

900,000

What is the accounts receivable balance at December 31? a. b.

P1,700,000 P1,300,000

c. d.

P1,200,000 P 700,000

19. Gomez Company's net accounts receivable were P400,000 at December 31, 2009 and P440,000 at December 31, 2010. Net cash sales for 2010 were P260,000. The accounts receivable turnover for 2010 was 7.0. What were Gomez's total net sales for 2010? a. P1,820,000 c. P2,940,000 b. P3,200,000 d. P2,680,000

20. Ilocos Company sold merchandise on credit to Norte Company for P100,000 on July 1, with terms of 2/10, net /30. On July 6, Norte returned P20,000 worth of merchandise claiming the materials were defective. On July 8, Ilocos received a payment from Norte and credited Accounts Receivable for P45,000. On July 24, Norte Company paid the remaining balance on its account. What was the total cash received from Norte during July? a. P44,100 c. P45,000 b. P79,100 d. P80,000 INVENTORIES 21.

La Union Company included the following items under inventories: Materials

P1,400,000

Advance for materials ordered

200,000

Goods in process

650,000

Unexpired insurance on inventories

60,000

Advertising catalogs and shipping boxes 150,000 Finished goods in factory

2,000,000

Finished goods in company-owned retail stores, including 50% profit on cost

750,000

Finished goods in hands of consignees including 40% profit on sales

400,000

Finished goods in transit to customers, shipped FOB destination, at cost

250,000

Finished goods out on approval, at cost 100,000 Unsalable finished goods, at cost

50,000

Office supplies

40,000

Materials in transit shipped FOB shipping point, excluding freight of P30,000

330,000

Goods held on consignment, at sales price, cost P150,000

200,000

Compute the amount to be presented as “Inventories” under current assets. a. P5,500,000 c. P5,650,000 b. P5,470,000 d. P5,700,000 22. Ovation Company asks you to review its December 31, 2010, inventory values and prepare the necessary adjustments to the books. The following information is given to you. a. Ovation uses the periodic method of recording inventory. A physical count reveals P2,348,900 inventory on hand at December 31, 2010. b. Not included in the physical count of inventory is P134,200 of merchandise purchased on December 15 from Standing. This merchandise was shipped f.o.b. shipping point on December 29 and arrived in January. The invoice arrived and was recorded on December 31. c. Included in inventory is merchandise sold to Oval on December 30, f.o.b. destination. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale on account for P128,000 on December 31. The merchandise cost P73,500, and Oval received it on January 3.

d. Included in inventory was merchandise received from Owl on December 31 with an invoice price of P156,300. The merchandise was shipped f.o.b destination. The invoice, which has not yet arrived, has not been recorded. e. Not included in inventory is P85,400 of merchandise purchased from Oxygen Industries. The merchandise was received on December 31 after the inventory had been counted. The invoice was received and recorded on December 30. f. Included in inventory was P104,380 of inventory held by Ovation on consignment from Ovoid Industries. g. Included in inventory is merchandise sold to Kemp f.o.b. shipping point. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale for P189,000 on December 31. The cost of this merchandise was P105,200, and Kemp received the merchandise on January 5. h. Excluded from inventory was carton labeled “Please accept for credit.” This carton contains merchandise costing P15,000 which had been sold to a customer for P25,000. No entry had been made to the books to reflect the return, but none of the returned merchandise seemed damaged. The adjusted inventory cost of Ovation Company at December 31, 2010 should be a. P2,217,620 c. P2,411,320 d. P2,373,920 b. P2,396,320 23. The physical inventory of Pangasinan Company on December 31, 2010, showed merchandise with a cost of P4,000,000 was on hand at that date. You also discovered the following items were all excluded from the count: a. Merchandise costing P160,000, which was held by Pangasinan on consignment. The consignor is a subsidiary. b. A special machine, fabricated to order for a customer costing P400,000, was finished and specifically segregated in the back part of the shipping room on December 31, 2010. The customer was billed on that date and the machine excluded from inventory although it was shipped on January 4, 2011. c. Merchandise costing P80,000, which was shipped by Pangasinan f.o.b. destination to a customer on December 31, 2010. The customer expects to receive the merchandise on January 3, 2011. d. Merchandise costing P120,000 which was shipped by Pangasinan f.o.b. shipping point to a customer on December 29, 2010. e. Merchandise costing P50,000 shipped by a vendor f.o.b. seller on December 28, 2010 and received by Pangasinan on January 10, 2011. The corrected balance of Pangasinan’s inventory should be a. P4,530,000 c. P4,480,000 b. P4,130,000 d. P4,690,000 Transactions for the month of June were:

Sales Purchases June 1 (balance)

400 @ P3.20

3

1,100 @

June

2

300 @ P5.50

3.10

800 @

5.50

500 @

5.50

6 7

600 @

3.30 9

15

900 @

3.40

10

200 @

6.00

22

250 @

3.50

18

700 @

6.00

25

24. Assuming that perpetual inventory inventory on a FIFO basis is c. P2,065 a. P1,900 b. P1,920 d. P2,100

records

150 @

are

kept

6.00

in

pesos,

the

ending

25. Assuming that perpetual inventory records are kept in units only, the ending inventory on an average-cost basis is a. P1,980 c. P1,970 b. P1,956 d. P1,995 26. The Alcala Company counted its ending inventory on December 31. None of the following items were included when the total amount of the company’s ending inventory was computed:  P150,000 in goods...